Connecting the Dots


Will McIntosh
Global Head of Research

John Kirk
Senior Director, Research

Mark Fitzgerald
Senior Director, Research

October 2015

How China’s economic malaise could affect U.S. real estate markets

Do you remember when China consistently delivered quarterly GDP growth above 7 percent, had one of the fastest-growing stock markets in the world and minted 1 million new millionaires in only 12 months? It is hard to believe that was only a year ago, particularly because China recently has become what many investors fear most from an economic superpower — unpredictable. In the past few months, the country’s image of stability has fractured because of a combination of financial missteps and economic underperformance. Meanwhile, U.S. real estate investors have been watching things unfold safely outside the impact zone of this economic malaise, treating it primarily as a peripheral issue. In all likelihood, that is the right approach — but what if it’s not?

What happened in China?

In recent months, a series of major economic events occurred in China, starting with a stock market sell-off that sparked investor concern around the globe. After climbing nearly 150 percent over the past year, the Chinese stock market peaked in June before falling 30 percent in only a few weeks. Fearing further decline, the Chinese government intervened with an extraordinary initiative to purchase nearly every share as investors retreated from the market.